May 20, 2024

How To Get Balance Right Between Pushing Rate & Pushing Occupancy

The age-old debate in revenue management: do I sell out at cheap rates or keep rate stability and run at a lower occupancy?

NB: This is a post from Duetto

Lets consider it in more detail.

In todays vibrant market, where not just is need fluctuating on an everyday rate but also staffing levels and the capability to turn rooms, the question of putting profit prior to earnings has never been more crucial.

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Rate stability is good, but there are going to be specific days that need to have unique attention and where you press occupancy. For instance, Sunday nights see generally really low demand.

Take a look at your STR reports, understand how your hotel works now, likewise how your competitors work. Think about if they are the right competitors now?

A high tenancy likewise comes with high operating costs. These may be offset if the visitor is investing in residential or commercial property in your F&B outlets, medical spa, or other ancillary invest. But possibilities are the greater operating cost and lower room rate are just deteriorating your profit margin.

If you are continuously looking for high tenancy and low ADR you are perhaps fishing in other waters. And if you do that for too long it can be a battle to restore your best rates position in the market.

Comprehend what is your bottom and what is your top in terms of rate. The brand-new hybrid work/life balance may indicate that Sundays are no longer a low-demand day, or that Thursdays are a night to view as the bleisure market comes back into play.

And this is prior to we consider the difficulties around staffing levels today. A lower rate might be appropriate if you are pressing for a longer length of stay and the visitor is not expecting a daily tidy, turndown service, or complimentary breakfast.

Analysis is more vital than ever. Know new patterns in demand, evaluate your information, and get truly granular with space type analysis, length of stay patterns, and reserving windows.

The alternative is to control your ADR and accept that you are not going to offer out.

Normally, concentrating on ADR is always much better than concentrating on occupancy, however in todays ever-changing market conditions, you do require a combination of both.

You require to treat each day as a distinct proposition however not in seclusion from the marketplace.

And this is where you require to utilize income management by exception.

Make sure your income technique is running in tandem with the market, however also ensure it is your revenue method and not that of your comp set. Hold company on rates and comprehend the worth of your offering.

Check out more articles from Duetto

Comprehend what is your bottom and what is your top in terms of rate. The brand-new hybrid work/life balance might mean that Sundays are no longer a low-demand day, or that Thursdays are a night to watch as the bleisure market comes back into play.

If you are constantly looking for high tenancy and low ADR you are perhaps fishing in other waters. A high tenancy likewise comes with high operating expenses. Possibilities are the higher operating expense and lower room rate are simply deteriorating your revenue margin.